Transatlantic Trade’s Transformative Potential

NEWPORT BEACH – After instant and seemingly coordinated fanfare in Europe and the United States, the proposal for a European Union-US free-trade area has been generating little media attention. There are three reasons for this, and all three highlight broader constraints on good national economic policymaking and productive cross-border coordination.

In his “State of the Union” address in February, US President Barack Obama proposed a “comprehensive Transatlantic Trade and Investment Partnership” with Europe based on trade that is “fair and free.” His administration regards this as part of a comprehensive approach to generating “good-paying American jobs.”

Obama’s bold proposal received an immediate and enthusiastic reception in Europe. Taking to the airwaves within hours, European Commission President José Manuel Barroso and European Council President Herman Van Rompuy called the proposal “ground-breaking.” Arguing that it could increase Europe’s annual economic growth rate by half a percentage point, they declared that formal negotiations would start quickly.

At first, there was quite a bit of general interest, and understandably so. The proposal involves the world’s two largest economic areas, with national, regional, and global implications. Yet, despite the realization that an agreement could fundamentally alter the nature of global trade and production networks, it only took a few weeks for interest to drop off.